Why traditional organisations are failing to innovate?
Updated: Sep 20, 2019
Originally published in LinkedIn by Krishnan Naganathan in July 2018
Many traditional organisations have recognised the need for innovation. They have identified task forces, champions and consultants. They have set up an ideation platform and process. And still they can’t achieve anything more than incremental improvements. What’s going wrong?
There seem to be multiple factors that seem to limit organisations ability to innovate
1. Most employees in the organisation are still working on the existing business and are trying hard to deliver goals. The employees are hardwired to think existing business and use existing capabilities in such an environment. As such everything they come up with and the ideas that get selected for implementation are those with which the organisation is familiar. Hence most ideas end up being incremental improvements.
2. Organisation's reward systems simply are against innovation. The future “S Curves” of an organisation are always filled with uncertainty. But most organisations only reward implemented ideas. There is no recognition for an employee to work on an idea which has a 10x potential but also a high risk of failure. It is likely that after one failure the employee is side-lined. As a result, employees are unlikely to work on ideas that have risk of failure. Unfortunately, innovation depends on learning from failure as well and only a small percentage of the innovative ideas actually succeed.
3. Leadership is so focussed on the current quarter and next quarter that they will always prioritize the current “S Curve”. Most organizations are trained to set goals and systematically achieve them. In some of the most efficient organization, you actually have very robust policy deployment process focussed on achieving the set goals. This type of leadership style referred to as Spiral Staircase is totally unsuited for radical innovation.
4. Idea screening processes are biased against the unknown. In a screening process most ideas are likely evaluated using existing knowledge, skills and competencies. High risk and uncertainty is allocated to radical ideas, they are denied the required resources and are screened out. What you end up having are familiar things.
No wonder organisations struggle to innovate. So what should they be doing? Here are a few things to try.
1. Promote non Spiral Staircase leadership style. Identify leaders who are ready to challenge status quo and champion the case of radical ideas.
2. Identify anthropologists and hurdlers amongst your employees. Encourage them to interact with end users and bring in fresh insights.
3. Don’t be afraid of failures and certainly don’t punish failures. Encourage fail fast theory.
4. Provide enough time for employees to experiment with new ideas. Make that part of work and don’t de-prioritise such efforts
5. Work in the horizons. Allocate resources for working on new “S Curves”. Build the right capabilities and leadership for each horizon
6. Set very clear innovation goals. Share with employees the growth gap you are trying to bridge. Align strategy with capabilities
7. Build eco systems – alone is not strong. Encourage collaboration with suppliers, universities and customers
The author is an innovation management consultant and an Innovation 360 Licensed Practitioner.